First things first – to buy or to sell?

A question that CENTURY 21 agents are often asked concerns the timing of the moving process – should you buy or sell first? In my experience, there really isn’t one correct way of moving house; buying first works for some people and selling first is the right choice for others.  I thought I’d use this blog to go through some of the benefits and disadvantages of both as I see it.

Selling your home before buying another is often considered a safer way of doing things; once you sell, you know exactly how much money you have available to spend on your new property, and it will be in your bank account ready to go.  In many cases, you’re so wrapped up in preparing your property for sale that there just isn’t enough time to also be house hunting anyway.   

Synchronizing the sale of your own home and the purchase of another can sometimes be tricky.  If you haven’t found a suitable property to purchase by the end of your settlement period, you will be forced to rent until something you like comes onto the market. 

Now renting can be expensive and it only eats into the money that you will use eventually to buy something with.   Rental agreements have to be signed which will lock you into monthly payments, sometimes for an extended period.   We sometimes see people so exhausted by a failed property search, then a rental search followed by a move, that it takes some time before they start the house hunting process again.   

Now with many residential property forecasters predicting further robust growth in home prices this year the idea of buying before selling has some merit to it.  If you can buy at a lower price and then sell when values have increased slightly, you could very well gain financially. While this can happen, always remember that prices and markets fall as well. 

Unless you’re in a position to be able to afford both homes at once, you will likely need to sell the original property in order to fund the new one.  Not surprisingly, this can create a fair bit of stress.  Some people can handle this stress while others may find it extremely unpleasant. 

It has been in the news lately that there is a bit of a shortage of properties in the rental market.  If you are in a position to afford your two properties comfortably, then it may not be a bad time to consider holding on to your original property after you move and renting it out.  There are certain tax implications to consider here, however you may find that this is a suitable solution for your situation. 

Ultimately, common sense is usually a good guide.  If you live in a property that looks like it may be hard to sell, then buying before it has been purchased may perhaps not be the best idea.  Alternatively, if you live in the type of house that is in high demand and you find something that you love before it sells, then buying could be the right option for you. 

In any case, whatever decision you make should be based entirely on your own personal circumstances.  It may help to talk to a real estate agent you trust and get his or her opinion.  

 

Posted by Charles Tarbey on 22/06/2010 at 12:00 AM | Categories: Selling - Buying -

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